Mortgage rates move up and down all the time - and there is nothing you can do to change that. They depend on the economy, inflation, the Fed, and other things that don’t care how ready you are to buy a house. Still, that doesn’t mean you are stuck with a bad deal.
You can't control the rate but can control how good you look to a lender. Lenders want to know one thing: Can you pay them back? The better your money habits look, the better the deal they will offer. Here is how you can make that happen.
Save for a Bigger Down Payment
More money upfront means less risk for the bank. That means better odds of getting a solid deal on your mortgage. A bigger down payment lowers the loan amount, which can cut your interest costs over time. It might even help you skip private mortgage insurance, which saves you even more.
Nilov/ Pexels / If you can, aim for a 20% down payment. But even 10% is better than the bare minimum. That extra cash shows you are serious. It gives you leverage.
Above all, it puts you in a stronger position to negotiate with lenders. If it takes a few more months to save, that is okay. Waiting a little now can save you thousands later.
Pay Down Debt
Lenders look at how much money you owe compared to how much you make. This is called your debt-to-income ratio. If that number is high, you are seen as risky - even if you have never missed a payment.
Too much debt tells the bank you might be stretched thin. That can push your mortgage offer into higher-rate territory.
Start with your smallest debts and knock them out fast. Credit cards are a good place to start. The less you owe, the better you look. Plus, paying off debt shows you are responsible with money - and that gets rewarded. Even if you can't pay everything off, shrinking your debt makes a big difference when it is time to apply.
Improve Your Credit Score
Your credit score is like your money report card. It tells lenders how you have handled credit in the past. A low score makes you look risky. A high score says, “This person pays their bills.” A better score usually means a better mortgage offer.
Freepik / Perhaps one of the most trusted ways of getting the best deal on mortgages is improving your credit score.
You don’t need perfect credit, but you do need a clean record. Pay bills on time - every time. Don't max out your credit cards. If you spot any errors on your credit report, fix them quickly. Even small changes can give your score a quick boost. Give yourself a few months to clean it up before you apply. It is worth it.
Shop Around Seriously
People spend weeks picking a couch but sign a mortgage with the first bank they call. Big mistake. Not all lenders offer the same rates, and those small differences add up - big time. One lender might charge more in fees, while another has better terms. You won’t know unless you ask.
So, to summarize, get quotes from at least three lenders. Compare everything: the rate, the fees, and the closing costs. Don’t be shy. You are the customer, and lenders want your business, so use that to your advantage. Even if rates are high across the board, the best deal is still out there.
